Markets update: Clock strikes for TikTok

Much of the business news last week centred around TikTok, which shut down in the US on Sunday, before announcing it was “in the process of restoring service” later the same day, writes Ian Slattery.

Ian Slattery, Zurich Investments

The week started on a sombre note with the S&P 500 dropping to its lowest level since the beginning of November, the gains of the post-election rally all but wiped out. But a melange of fresh economic releases brought renewed hope to the stumbling equity markets.

On Tuesday, Producer Price Index (PPI) inflation printed at 3.3% for December, below the expected 3.4%. CPI reporting followed on Wednesday, with the core (excluding food and energy) growth rate dropping to 3.2%, representing a three-year low that was under projections of 3.3%.

In response, the three major stock indexes, the S&P 500, the Nasdaq, and the Dow Jones, had their best day since 6th November. The stronger than-anticipated inflation data brought a halt to the bond sell-off, and the 10-year treasury yield fell from 4.8% to 4.6%.

In the UK, headline CPI inflation came in at 2.5% for December, under the 2.6% consensus outlook. Meanwhile, GDP data showed the economy grew by 0.1% MoM in November, missing forecasts of 0.2%.

On Friday, retail sales severely undershot expectations for December, falling by 0.3% month on month after having been projected to rise by 0.4%. Data showed that food stores had their worst Christmas in terms of sales volumes since 2013.

UK equities rallied, as the combination of falling inflation and weak economic growth hardened the case for rate cuts next month. The FTSE 100 experienced a spike on Friday that pushed it to an all-time high.

In China, stimulus measures helped GDP growth to surpass expectations in the fourth quarter of 2024, measuring at 5.4% YoY. The economy met the government’s 5% growth target for the year.   Elsewhere, in commodities, oil continued its strong beginning to 2025 after the US issued new sanctions on Russia’s energy sector, raising the expectation of supply disruptions.

Equities

Global stocks finished at 2.2% in euro terms and 2.7% in local terms last week. Year-to-date global markets are up by 2.5% in euro terms and down by 1.9% in local terms. The US market, the largest in the world, finished at 2.5% in euro terms and 3.0% local terms.

Fixed Income & FX

The US 10-year yield finished at 4.6% last week. The German equivalent finished at 2.5%. The Irish 10-year bond yield finished at 2.8%. The Euro/US Dollar exchange rate finished at 1.03, whilst Euro/GBP finished at 0.84.

Commodities

Oil finished the week at $78 per barrel and is up 9.4% year-to-date in euro terms. Gold finished the week at $2,703 per troy ounce and is up 3.8% year-to-date in euro terms. Copper finished the week at $9,082 per tonne.

The week ahead

Monday 20^th January

Inauguration of Donald Trump as US president. US markets closed for MLK Day.

Thursday 23^rd January

Japan CPI goes to print.

Friday 24^th January

Bank of Japan announce rate decision.